Phospholipid methylation cascade was found to be associated with receptor mediated transmission of biological signals in several systems. The phospholipid cascade involves interaction of cell surface membrane receptors with specific ligands, activation of phospholipid methylation, influx of Ca++, activation of phospholipase A2, liberation of arachidonic acid and lysophosphatidyl choline. Among the various cellular processes utilizing this cascade are IgE mediated release of histamine from mast cells and leukemic basophils, stimulation of chemotaxis in neutrophils by fMet-Leu-Phe, destruction of malignant tumors by natural killer cells and the generation of prostaglandin by bradykinin stimulated fibroblasts. A phospholipase inhibiting protein, lipomodulin, was purified almost to homogeneity and its properties studied, An antibody to lipomodulin was found in the sera of subjects with rheumatic diseases.